1. To save for a car, you put $600 every 3 months into an account earning 3%
compounded quarterly. How much will you have in the account in 3 years?
2. A couple has a mortgage on a $250,000 home. They put $50,000 down and
financed the rest by making monthly payments at interest rate 5% compounded
monthly for 30 years.
a) Find their monthly payment.
b) What is their equity after 10 years? Equity=Value of the home – what they still
owe
c) How much interest have they paid over the ten years?
d) Suppose at this time ( the end of ten years) they are able to refinance at 4%
interest compounded monthly. Find their new payment.
3. You set up a fund to be able to withdraw $10,000 per year for the next 15
years. How much must you deposit today if interest is 4% compounded yearly?
4. To buy a new car you put down $2500. The rest is paid monthly at $300/month
for 2 years. What was the price of the car if interest is 6% compounded monthly?